Question

Follow up Problem 1
State with reasons which item is capital and which item is revenue in nature.
6) 732,000 were spent in the construction of a office building.
(1) 7 11,000 were spent on the replacement of a part of machine which will increase the
earning capacity
fiii) Paid 7 60,000 salaries to the staff,
(v) Discount allowed to debtors 150.
(v) Legal expenses 4,000 paid to acquire the ownership of a building​

Answer 1

Answer:

1. Construction of building - - - - capital nature.

2. Spend on machin to earn - - - - revenue nature.

3. Paid salaries - - - - revenue nature.

4. Discount allowed - - - - - revenue nature.

5. Expenses for building - - - - capital nature.